Fork it over, AIG: Forget half; send back all those fat bonuses

Called to account before Congress yesterday, AIG's chairman said he has asked his $165 million bonus babies to voluntarily surrender half the money they've just been paid. That's a start.

Edward Liddy's surprise and belated plea to the 73 beneficiaries was but a recognition that Americans have had it up to the eyeballs and beyond with Wall Street bandits who are still making out like, well, bandits.

Advertisement

With everyone from President Obama on down to Joe Sixpack substituting AIG for Bernie Madoff as a target of fury, Liddy couldn't very well have stood pat in asserting there was nothing he could do because the payments were contractually required.

Although the deals were negotiated long before Liddy was brought in to rescue the company, such had been his misguided position before the house started burning down around him. Now, he's appealing to the better angels of the AIG crew that almost brought down the world economy.

We'll see.

By all rights, as a matter of decency and in acknowledgment of the debt they owe the taxpayers who own their firm, they should return every penny.

Doing so would head off the truly bad ideas of trying to abrogate contracts, suing our way to a recovery or imposing a confiscatory tax. It also would make it that much easier to work out further AIG bailouts, should they become necessary.

Liddy acquitted himself well before a seething House panel. Based on limited evidence, he impressed as in command and slowly cleaning up the AIG mess with some hope of blunting damage to the taxpayers. But the evidence, again, was limited.

There is still far too little transparency on what's been done with the $170 billion in bailout funds, why and to what effect. Similarly, there is still much to learn about who knew what when regarding the bonuses.

Liddy said he found the bonus contracts "distasteful" but decided to go ahead rather than risk wholesale departures of people who manage $1.7 trillion in complex investments. He misjudged badly in that he has essentially arrived at the same spot, asking the same people to give up what they are due.

He also erred in resisting a subpoena from state Attorney General Andrew Cuomo demanding all the bonus documents, including the names of recipients. Liddy cited privacy concerns along with fears for the safety of the individuals and families.

A New York judge yesterday upheld Cuomo's right to get similar information from Merrill Lynch. Liddy should take that as an instruction to turn over the AIG names and all relevant materials, having faith that Cuomo will not blithely make the personal information public.

Someone needs to check the facts. Not that we don't trust the AIG folks.